At ilumoni, we want to help UK borrowers #BorrowWell and it’s a desire which underpins everything we do. But what does it mean to borrow well, and where did the idea for the ilumoni app come from? We sat down with one of our co-founders and CEO, Gary Wigglesworth, to learn more about how ilumoni began and their aims for the future.
For the majority of us, when we use credit, we’re not thinking about the loan, we’re thinking about what we can buy with it, be it a house, holiday or sofa. It’s quite rare that we’re thinking about the borrowing itself; the term, the interest rate, and what it might cost us long term, and often the reason for that is that we have an urgent (or perceived urgent) need to borrow. The boiler’s broken or the car needs new tyres and payday is a week or so away, or perhaps an item is on sale and we’ll miss out on the deal if we don’t get it now. On the flip side, we also have many people using credit to spread the cost of expenses and outgoings as a means of managing expendable cash or using it for the payment protection it offers.
Whatever the reason, borrowing has become a part of life for people in the UK, and it plays an important role in both society and our individual lives. Where people begin to come unstuck is when they don’t consider the overall cost of the item including the interest, don’t fully understand how long it might take to repay as a result or just stop paying attention to how they repay because there are higher priority items on the to-do list. How quickly we can access credit, or the monthly payment, is usually the most important factor when paying for something using credit, which often isn’t the best way to manage borrowing long-term.
At ilumoni, we want to give borrowers the confidence to make informed decisions. Financial calculations are neither easy nor fun, particularly given how time-poor we all are these days. With easy access to credit, confusing terms or jargon and everyday pressures on our finances, it’s become easy to borrow, but hard to borrow well.
"For me, to borrow well means to make borrowing work for you."
For me, to borrow well means to make borrowing work for you. It means knowing exactly how much the interest is, how long it will take to repay based on repayments you can afford, and understanding what your other options are, or how this new credit might affect your financial wellbeing overall. When you’re borrowing well, you know your debt inside out and can make the best decisions based on what’s available to you.
Both Jonathan (our other Co-Founder) and I have worked in financial services for a number of years and, increasingly, we noticed that while there are lots of organisations who offer help to those severely in debt or difficulty, there didn’t seem to be many resources available for people who weren’t in crisis, but could still be in a much better position financially.
For Jonathan, despite having spent his career in finance working for high-street banks and other fintechs, he still found himself balancing various forms of debt. Recognising that he was probably best placed to manage debt with his experience of the industry, he became determined to create a tool that helped people improve their circumstances and take control of their borrowing.
Being particularly fascinated by the psychology of borrowing, I find it especially interesting (though not that surprising) to see that, often, it’s our habits that cause us to pay more than we need to, or carry debt for longer. As human beings, we’re very good at becoming accustomed to things as they are and avoiding tasks that we feel are stressful or overwhelming. Borrowing is no different in that respect.
"As human beings, we’re very good at becoming accustomed to things as they are and avoiding tasks that we feel are stressful or overwhelming. Borrowing is no different in that respect."
Making financial calculations, researching which products are best for us, sense-checking APRs and T&Cs, and working out what something will ultimately cost us aren’t the activities we want to engage in when we’re about to book ourselves a weekend away. Similarly, addressing our repayment amounts and budgeting according to what we can afford is a job that tends to get de-prioritised among work or family commitments. Let’s face it, nobody wants to spend Friday night reviewing loan documentation, or comparing terms and rates to check whether they’re in the best position they can be. Instead, we often settle for the minimum repayment amount and carry on with our lives, without even realising that we could be saving thousands by making small, affordable changes to that repayment amount.
Working together with Jonathan has allowed us to make ilumoni more than just an idea, and the name ilumoni comes from the notion that millions of people are in the dark about their borrowing. By shining a light on how their habits or behaviours can have a direct impact on how much they pay overall, and how long for, ilumoni can help people improve their financial (and often mental) wellbeing, and become better borrowers.
ilumoni is a game-changer in that it doesn’t just show your balances, or how much debt you carry. You get a full breakdown of the interest you’re paying on each of your accounts or balances, as well as being able to see exactly how long it will take you to pay off each balance based on your current repayment amounts.
The app connects a user’s credit report, bank and credit accounts and then uses AI technology to analyse your borrowing and repayment habits, to highlight alternative repayment options or products that you could benefit from. For the repayments, that means seeing exactly what the impact of paying £X more a month would have on both the total interest paid and time to repay. We’ve also included a sliding scale feature so users can explore other outcomes within the app.
More than that though, the app also takes into account what you can afford. For example, if the app sees you suddenly have £300 more each month (maybe from a pay rise or recently cleared debt), it can show you the impact that money could have if put into paying down another balance, in both overall cost terms and time to pay off that debt. That might seem obvious, but you’d be surprised how much paying just £10 more a month can decrease the years it can take to repay balances due to the way in which interest works.
We’re not a lender though. Instead, we work with a panel of reputable lenders (which we’re expanding!) to provide our customers with a choice of options, suited to the goals and priorities they’ve shared with us in the app.
For me and Jonathan, and the wider ilumoni team, the main focus of the app is to provide our users with actionable insights, specific to them. It’s not just about providing information, it’s the “so what?” aspect. So what if I have £15k in credit card debt? Tell me instead what I can do about it that’s going to make me feel better and more confident about my financial situation.
In general, most of us can significantly improve our financial wellbeing by making simple changes to our borrowing habits. For some of us, however, switching to a more competitive or more appropriate product might have a greater impact on the overall time to repay, or how manageable a debt feels.
For those customers, the app will present alternative products for them to consider. If they choose to switch using ilumoni as a result, we’ll receive an introductory fee from the lender - which is how we make money to keep the app running. The user, however, will see the same product terms and prices as if they’d gone directly to the lender, and that was really important to us when developing the app. ilumoni will also never highlight an alternative product unless it has a clear benefit for the customer, based on what they’ve told us they want to achieve through using the app, nor will the app prioritise those products based on the fee we receive.
ilumoni has been designed to serve as many people as possible, regardless of their income. You can earn well above the national average and still carry more debt (and pay more in fees and interest) than you need to, for example. A huge number of us are guilty of not paying enough attention to our borrowing behaviours because we have more exciting things to think about, and it just isn’t front of mind. It’s these behaviours, though, that often cost us more dearly than we realise.
ilumoni isn’t a formal debt solution provider though, so if someone is dealing with an unmanageable amount of debt, there are organisations that are better positioned to help them. There’s a directory of such organisations on the Debt Helplines page of our website and the ilumoni app will also recognise when someone might be approaching difficulties. Again, this was a really important feature for us to develop, as we want to offer support to as many people as we can and, ultimately, try and prevent people from reaching the point where formal debt solutions are required.
That being said, for the majority of UK borrowers, there is always room for improvement so I’d encourage anyone to give the ilumoni app a chance, to see if they can find better ways to repay or clear their balances faster than expected.
Well, considering we’ve only just launched on the App Store and Google Play, we’re fairly busy making sure we reach as many people as possible! But we’re always looking to improve the app and add new features, so we’re working on that in the background.
Beyond the app, we’re also keen to work with other organisations to raise awareness of the issues surrounding our borrowing behaviours and the impact they have on how much we pay. Our Campaign for Better Borrowing will be looking to address this, so keep an eye out for more on that!
The ilumoni app is now available on Google Play for Android or the App Store for iOS. Download it now to start your #BorrowWell journey, and make borrowing work for you.
© 2021 by ilumoni
ilumoni is a trading name of Monely Limited registered and regulated by the Financial Conduct Authority (928933 and 928681), registered in England and Wales (Company number 11886611), Registered Office: The Barnsley Digital Media Centre, County Way, Barnsley, S70 2JW